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KazMunaiGaz Sets Price for IPO

By

Beno&icirc;t Faucon

Updated Oct. 2, 2006 12:01 a.m. ET

LONDON -- The exploration and production unit of Kazakh state oil-and-gas company KazMunaiGaz on Friday said it priced its London initial public offering close to the top of the range, at $14.64 a global depositary receipt, following strong demand from international investors.

The company plans to raise $2 billion through the sale and issuance of shares, and the price implies a market value of $6.2 billion.

The initial price range of KazMunaiGaz Exploration & Production was set last month at $12.75 to $14.75 a global depositary receipt, with one GDR representing one-sixth of a local share. Shares are scheduled to start trading in London Thursday. Some already trade on the Kazakh stock exchange.

Following the London listing, the free float will be about 40%. The remaining 60% will be held by parent KazMunaiGaz. The global offering consists of about 23.1 million newly issued ordinary shares offered by the company alongside almost 3.5 million secondary ordinary shares offered on behalf of KazMunaiGaz for overallotments.

Dmitry Loukashov,
a Moscow-based analyst with Aton Capital, said the pricing was "very predictable." Mr. Loukashov said he sees the fair value lower, at $12.82, but added that the GDR price will be supported by international funds' interest in the Kazakh economy and other factors.

The deal is set to eclipse the $1.1 billion offering last year by copper miner
Kazakhmys
PLC to become the largest-ever Kazakh float.